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Padmashree Anandhan
21 September 2025 |
What happened?
On 17 September, the EU proposed a new strategy to improve bilateral relations with India. European Commission President Ursula Von Der Leyen announced the initiative “New Strategic EU-India Agenda.” She said: “With our new EU–India strategy, we are taking our relationship to the next level. Advancing trade, investment and talent mobility. Strengthening our joint economic security…Europe is open for business. And we are ready to invest in our shared future with India.”
In response, India’s Commerce Minister Piyush Goyal said: "India and the EU complement each other and offer great opportunities on both sides."
Anil Wadhwa, a former Indian diplomat said: “Resolving market access, agricultural tariffs and CBAM is pivotal for unlocking greater trade volume, safeguarding Indian industry, and ensuring EU climate goals do not penalize Indian exporters unfairly.”
The strategy includes five key areas of shared interest. Starting from emerging technologies, clean transition, security and defence, regional connectivity (multilateral cooperation) and mobility cooperation.
What is the background?
First, a brief note on geopolitics. The EU-India Free Trade Agreement (FTA) negotiations, which began in 2007 and were relaunched in 2021, is witnessing a turning point with emerging geopolitical developments. This is leaning more towards the EU as the transatlantic relations become conditional and aim to de-risk from China. India offers a large market, aligning with its democratic values and a secure partner for resilient supply chains. While the EU aids in critical investment, exports and technology transfer, which could help India reach its USD 10 trillion economy target. The negotiations, which were stalled once due to difficulty in reaching a consensus among the political leaders, no longer stand as a barrier. Both are at convergence to counter rising China’s influence and increase economic presence internationally.
Second, the complex road to the EU-India FTA. The trade relations and negotiation process have seen multiple phases for the EU and India. However, it slowly evolved from 1960s when the economic cooperations began. In 1994, the EU-India Cooperation Agreement was established and advanced to a “Strategic partnership” in 2004. During this period, trade in goods expanded from EUR 13.7 billion to EUR 30 billion by 2007. This served as the base to start negotiations for an FTA. In 2013, due to differences over tariffs, services, regulatory standards, agriculture, intellectual property, and mobility, the discussion was stalled till 2021. The talks were relaunched again in 2022 along with negotiations for investment protection and geographical indications. In the past years, the talks have been fast-tracked with increased negotiation rounds and discussion over transparency, regulatory cooperation, customs and trade facilitation. At the same time, the trade in service have also grown from EUR 30 billion in 2020s to EUR 60 billion by 2023.
Third, significance of the FTA. Conclusion of FTA would showcase how a balanced trade partnership can be executed when the global trade is turning to be more fragmented. It shows possibility of strengthening economic partnerships beyond US and China. For the EU, India would be an alternate for production to reduce its dependence on China. While for India, gaining access to EU’s single market would boost its exports and improve the industrial value. The deal would also help in sustainable development, carbon regulation (CBAM) and digital trade.
Fourth, areas of divergence. The major difference between the EU and India in FTA negotiations is on market access, regulatory standards and services. The EU calls for reduced tariffs on industrial, automobile, wine, and dairy products, combined with strong intellectual property protection and environmental standards. However, India remains cautious on opening up its agricultural, dairy, and domestic manufacturing sectors. India’s concerns are that the deal could undermine the “Make in India” initiative or restrict its ability to regulate digital trade and mobility of personnel. India also seems to seek higher flexibility in the movement of IT and business professionals. While the EU demands commitments on “labour mobility and regulatory equivalence.”
What does it mean?
Winners and losers at the industrial level. The FTA’s pros and cons at the sector level can be found by analysing the competition and tariff factors. For India, textile, apparel, leather, footwear, IT and business sectors are expected to benefit from the market and mobility opportunities of the EU. Whereas automobiles, dairy and agriculture would face increased competition and be affected by reduced tariffs. For the EU, it is expected to be the inverse scenario. However, some frictions could be seen in digital trade and trade regulation.
About the author
Padmashree Anandhan is a Project Associate at NIAS.
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